Globalization and the service economy

Date posted: April 24, 2012

When it comes to globalization, we may think first of lost factory jobs. But increasingly globalization is also affecting service-sector jobs. Why is this? And what has been the impact? N.C. State University economist Mike Walden explains.

“Well …, to answer the why, I think the main reason is information technology. It is now possible for a service worker — let’s say an architect or a computer scientist or a computer programmer — to be sitting in a foreign country and doing that work and then shipping those plans, shipping those programs almost instantaneously to another country.

“Likewise even in my profession — university teaching – [it] is now possible for students to sit in a lecture room and see a live feed from a professor lecturing from again a foreign country.

“So the point here is that information technology is now allowing services, if you will, to be produced and shipped from one country to another. And so this is having an impact on service employment. Just like globalization has an impact on factory employment, it’s affecting people in service industries from, for example, drafting and engineering, the law professions, et cetera.

“A recent study looked at what this has meant to U.S. service workers. And what the researchers found is that the globalization that has occurred over the last decade has increased the unemployment rate in the U.S. among service workers by about 1 percentage point.”

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